[Federal Register Volume 59, Number 194 (Friday, October 7, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-24933]


[[Page Unknown]]

[Federal Register: October 7, 1994]


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DEPARTMENT OF COMMERCE
50 CFR Part 676 
[Docket No. 940683-4277; I.D. 060994B] 
RIN 0648-AE79 
 

Limited Access Management of Federal Fisheries in and off of 
Alaska 
AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and 
Atmospheric Administration (NOAA), Commerce.

ACTION: Final rule.

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SUMMARY: NMFS issues a final rule to implement Amendment 31 to the 
Fishery Management Plan (FMP) for the Groundfish Fishery of the Bering 
Sea and Aleutian Islands Area (BSAI), Amendment 35 to the FMP for 
Groundfish of the Gulf of Alaska (GOA), and a regulatory amendment 
affecting the Pacific halibut fishery in and off of the State of Alaska 
(Alaska or State). This action implements the Modified Block Proposal, 
which is necessary to prevent excessive consolidation of the halibut 
and sablefish fisheries. This action also clarifies the transfer 
process for the Individual Fishing Quota (IFQ) program.

EFFECTIVE DATE: November 7, 1994; except the amendments to 
Secs. 676.16, 676.20(f), and 676.22(g), which will become effective on 
January 1, 1995.

ADDRESSES: Copies of Amendments 31, 35, and the Environmental 
Assessment/Regulatory Impact Review/Final Regulatory Flexibility 
Analysis for the Modified Block Proposal to the IFQ Program, may be 
obtained from the North Pacific Fishery Management Council (Council), 
P.O. Box 103136, Anchorage, AK 99510.

FOR FURTHER INFORMATION CONTACT: John Lepore, 907-586-7228.

SUPPLEMENTARY INFORMATION:

Background

    The Modified Block Proposal, as well as the other alternatives for 
the IFQ program for fixed-gear halibut and sablefish fisheries, are 
described in the Environmental Assessment/Regulatory Impact Review/
Initial Regulatory Flexibility Analysis (Analysis) dated December 17, 
1993. Language amending the BSAI and the GOA FMPs was developed for the 
Modified Block Proposal, the Council's chosen alternative.
    The amendments to the FMPs affect the sablefish fisheries in the 
exclusive economic zone off Alaska, which are managed in accordance 
with the BSAI and the GOA groundfish FMPs. The Council prepared both 
FMPs under authority of the Magnuson Fishery Conservation and 
Management Act (Magnuson Act).
    The domestic fishery for halibut in and off of Alaska is managed by 
the International Pacific Halibut Commission (IPHC), as provided by the 
Convention between the United States and Canada for the Preservation of 
the Halibut Fishery of the Northern Pacific Ocean and the Bering Sea 
(Convention) and the Northern Pacific Halibut Act of 1982 (Halibut 
Act). The Convention and the Halibut Act authorize the Council to 
develop regulations that are in addition to, but not in conflict with, 
regulations adopted by the IPHC affecting the U.S. halibut fishery. 
Under this authority, the Council may develop, for approval by NMFS, 
limited-access policies for the Pacific halibut fishery in Convention 
waters in and off of Alaska.
    The Council acted under these authorities in recommending changes 
to the IFQ program for the halibut and sablefish fisheries. The 
Council, through these changes, intends to promote the conservation and 
management of the sablefish and halibut fisheries, and to further the 
objectives of the Magnuson Act and the Halibut Act.

QS Block Proposals

    Concern over the potential for excessive consolidation of fishing 
privileges under the IFQ program was the impetus for the Modified Block 
Proposal. The Modified Block Proposal provides that (1) initial 
allocations of QS that represent less than 20,000 lb (9 mt) of IFQ in 
the implementation year will be issued as a block, (2) QS that 
represent 20,000 lb (9 mt) or more of IFQ in the implementation year 
will be ``unblocked'' QS, and (3) QS in a block cannot be separated and 
will have to be transferred as a block. For each species in each IFQ 
regulatory area, a person who does not hold any unblocked QS can hold 
up to two QS blocks for that area, but the sum of the two QS blocks 
cannot exceed use limits in 50 CFR 676.22 (e) and (f). A person who 
holds unblocked QS for an IFQ regulatory area can hold only one QS 
block for that area, provided that the total QS held, blocked and 
unblocked, for that IFQ regulatory area does not exceed use limits 
referenced above. The Modified Block Proposal also provides that QS 
blocks resulting in less than 1,000 lb (0.5 mt) of IFQ for halibut, or 
3,000 lb (1.4 mt) of IFQ for sablefish, in the implementation year can 
be combined. The QS block resulting from this combination cannot exceed 
1,000 lb (0.5 mt) for halibut or 3,000 lb (1.4 mt) for sablefish. This 
``sweeping-up'' provision will allow very small QS allocations to be 
combined into ``fishable'' amounts.
    The Modified Block Proposal is intended to reduce the maximum 
potential consolidation relative to the current IFQ program. The 
Analysis indicated that, if actual consolidation is proportional to the 
estimates of maximum potential consolidation, more QS holders are 
likely to remain in the halibut and sablefish fisheries under the 
Modified Block Proposal than under the current IFQ program.
    The Modified Block Proposal will not interfere with the 
opportunities currently available under the IFQ program for larger 
operations, because QS allocations for an IFQ regulatory area that 
represent 20,000 lb (9 mt) or more of IFQ in 1994 will remain 
unblocked. The Council decided that the Modified Block Proposal would 
protect small producers, part-time participants, and entry-level 
participants--who may tend to disappear because of excessive 
consolidation under the current IFQ program--without compromising the 
flexibility and the economic efficiency of the IFQ program as a whole.
    Whether QS is blocked or unblocked will be determined by the QS 
pools for each IFQ regulatory area as they exist on October 17, 1994. 
Using a specific date to calculate whether to block QS ensures that all 
persons are treated in a similar manner, regardless of when their QS is 
issued. October 17, 1994, was chosen as the date to calculate QS 
because it was long enough after the application period, which ended 
July 15, 1994, to allow the QS pools to achieve QS amounts reflective 
of their eventual range, but long enough before the 1995 fishing season 
to allow for transfers of QS for that fishing season.

Transfer of QS Blocks

    Blocked and unblocked QS will be transferable subject to the 
approval of the Director, Alaska Region, NMFS (Regional Director), and 
compliance with the transfer regulations found in 50 CFR part 676. 
Changes are made to the transfer procedure in 50 CFR part 676 to 
accommodate the Modified Block Proposal, and to clarify further the 
transfer process. Further information on the rationale for these 
changes, and on the Modified Block Proposal, can be found in the 
proposed rule published in the Federal Register on June 28, 1994 (59 FR 
33272).

Changes From the Proposed Rule in the Final Rule

    1. The amendatory language to Sec. 676.20 in the proposed rule was 
numbered in such a manner that existing paragraphs (a)(1) Qualified 
persons and (a)(2) Vessel categories would have been deleted. This was 
a technical oversight. Paragraphs (a)(1) and (a)(2) of Sec. 676.20 will 
remain as published on November 9, 1993 (58 FR 59375), and will not be 
amended by this final rule. The amendatory language in paragraphs 
(a)(1) and (a)(2) of Sec. 676.20, which was in the proposed rule 
published June 28, 1994, (59 FR 33272) will be incorporated in 
paragraph (a) of Sec. 676.20 of this final rule.
    2. The reference to Sec. 676.22 in Sec. 676.21(c)(2) was changed to 
Sec. 676.22(j) to indicate the paragraph of the regulatory text 
intended to be referenced by the citation.

Response to Comments

    Twenty-two letters of comments were received regarding the Modified 
Block Proposal. Twelve letters provided comments that supported the 
Modified Block Proposal, eight letters provided comments in opposition, 
and two letters provided no comments. These comments, which are 
summarized and responded to below, were considered during the 
formulation of the final rule.
    Comment 1: The Modified Block Proposal is overly restrictive, 
especially to the smaller vessel categories.
    Response: Though the Modified Block Proposal will have a larger 
impact on the smaller vessel categories, the determining factor of 
whose QS will be blocked is the amount of catch landed and duration of 
participation during the qualifying years, not vessel size. Some 
owners/lessees of large and small vessels will be issued QS as a block, 
and some owners/lessees will be issued unblocked QS. More owners/
lessees of smaller vessels will have blocked QS due to smaller harvests 
during the qualifying years.
    Comment 2: Most of the QS issued in smaller vessel categories will 
be blocked. The QS in small blocks will have less value, making those 
blocks difficult to market.
    Response: The response to Comment 1 addresses why most QS issued in 
smaller vessel categories will be blocked. Any determination on the 
value of blocked or unblocked QS, whether in large or small quantities, 
is purely speculative. Blocked QS may be more or less valuable than 
unblocked QS, depending upon market forces. Small blocks, with their 
lesser overall dollar value, will make the IFQ Program more accessible 
to new entrants. Furthermore, the Modified Block Proposal allows very 
small blocks to be combined into fishable amounts under the ``sweep-
up'' provision.
    Comment 3: All QS should be blocked or unblocked. It is inequitable 
and discriminatory to block some QS and not other QS.
    Response: Blocking all QS was considered along with the Modified 
Block Proposal in the Analysis (see Sitka Block Alternative and Full/
Partial Block Alternative). The Council selected the Modified Block 
Proposal from among the other block proposals because: (1) Like the 
other block alternatives, it prevented excessive consolidation of QS; 
and (2) unlike the other block alternatives, it did not interfere with 
the opportunities currently available to larger operations in the 
fixed-gear Pacific halibut and sablefish fisheries by blocking all QS.
    The guidelines for FMPs at 50 CFR 602.14 (national standard 4--
Allocations) indicates that total parity in allocations is not 
necessary to comport with fairness and equity. Allocation decisions by 
the Council may be fair and equitable if those decisions are justified 
in terms of the objectives of the FMP amendment. The Modified Block 
Proposal was designed to preserve the way of life for fishermen and 
their families and the dependence of local communities on the fishery, 
which are legitimate social factors provided in the guidelines and 
identified by the Council. Furthermore, the Modified Block Proposal 
does not discriminate between residents of different states, which is 
the standard specified at Sec. 602.14(b).
    Comment 4: The Modified Block Proposal is inequitable because 
persons who were initially issued QS who owned/leased large vessels 
will receive most of their QS unblocked, allowing them to purchase more 
QS up to the use cap. Persons who were initially issued QS, however, 
who owned/leased small vessels will be issued their QS in blocks, 
preventing them from purchasing QS up to the use cap.
    Response: As explained in the response to Comment 3, the Modified 
Block Proposal is not inequitable under the guidelines in 50 CFR part 
602. Furthermore, although the Modified Block Proposal restricts the 
number of QS blocks that can be held by a person (up to two blocks per 
species and area), it does not prevent a person from purchasing QS up 
to the use cap. For example, if a person is initially issued QS in a 
block, that person, like a person who was initially issued unblocked 
QS, can purchase unblocked QS up to the use cap.
    Comment 5: The Modified Block Proposal creates a monopoly that 
violates the anti-trust laws. The IFQ Program should be administered 
under a ``free market'' system. Gear restrictions, rather than limited 
access, should be used to manage the resource.
    Response: The Modified Block Proposal does not create a monopoly, 
nor does it violate anti-trust laws. The Modified Block Proposal was 
designed to reduce consolidation by ensuring that more persons would 
hold QS under the Modified Block Proposal than may have held QS without 
it. The consolidation that may have occurred without the Modified Block 
Proposal could be more accurately characterized as a process that tends 
toward monopolistic control of the resource.
    QS, whether blocked or unblocked, is a harvest privilege that may 
be transferred. The value of transferred QS is not limited by the 
program. The value of QS will be determined by market forces, and, 
therefore, the IFQ Program is administered under a ``free market'' 
approach.
    Although gear restrictions can assist in managing a fishery, 
effective management requires a holistic approach. The IFQ Program is 
one of the many management tools used by NMFS to manage effectively the 
Pacific halibut and sablefish fisheries.
    Comment 6: The Modified Block Proposal will create different 
classes of QS holders depending on how much QS each person is issued. 
The restrictions on the amount of blocks that can be held, along with 
the various sizes of blocks, may necessitate the use of brokerage firms 
to facilitate transfers.
    Response: The Modified Block Proposal does not create different 
classes of QS holders. As explained in the response to Comment 1, the 
Modified Block Proposal establishes the criteria for determining 
whether QS will be blocked and unblocked. A person, if issued QS in a 
block, is not prohibited from obtaining unblocked QS. The transferable 
nature of QS will allow persons to hold blocked and/or unblocked QS, as 
long as the other requirements on holding QS are met.
    The Modified Block Proposal may increase QS transaction costs 
because some persons (i.e., those who already hold the maximum blocks 
allowed) will be required to transfer away one block before another 
block can be transferred to them. This cost may be exacerbated if the 
person who is making this transaction has a specific QS amount as a 
target. The Analysis for the Modified Block Proposal contemplated and 
addressed this increase in transaction costs for transfers. NMFS 
concluded from the Analysis that the benefits of curbing excessive 
consolidation outweighed the increase of transaction costs for 
transfers.
    Comment 7: Because blocks cannot be divided under the Modified 
Block Proposal, seizure of assets by the Internal Revenue Service to 
collect on delinquent taxes would mean that the entire block would be 
seized, rather than just the portion of QS necessary to satisfy the 
delinquency.
    Response: This course of events (i.e., seizing the entire block to 
satisfy a debt) was evaluated during the formulation of the rule. NMFS 
decided that the administrative costs associated with dividing blocks 
was not justifiable, especially because any inconvenience that may 
occur by seizing the entire block is due to the QS block holder's own 
delinquency. QS blocks can be sold to satisfy the existing debt like 
any other indivisible asset. After the debt has been satisfied, excess 
funds can be returned to the person whose block had been seized.
    Comment 8: The Modified Block Proposal will create greater 
administrative and enforcement costs for NMFS.
    Response: There will be no significant increase in administrative 
or enforcement costs because of the Modified Block Proposal. The 
Modified Block Proposal will affect the initial allocation and transfer 
of QS. This can be monitored by the computer at Restricted Access 
Management Division, NMFS, Alaska Region, which is currently programmed 
to perform this task. The Modified Block Proposal will not affect IFQ 
resource harvesting or deliveries, minimizing any impacts on 
enforcement.
    Comment 9: The Modified Block Proposal will decrease consolidation 
of fishing operations under the IFQ program.
    Response: The Modified Block Proposal was intended to prevent 
excessive consolidation that might have occurred under the IFQ program. 
This rationale is discussed at length in the Analysis for the Modified 
Block Proposal and the proposed rule published in the Federal Register 
on June 28, 1994 (59 FR 33272). In brief, the Modified Block Proposal 
will prevent excessive consolidation by blocking a portion of the total 
amount of QS issued and by restricting the number of blocks that can be 
held by an individual. These actions will increase the potential 
minimum holders of QS to an amount greater than under the status quo.
    Comment 10: The Modified Block Proposal will create block sizes 
that will provide easy access to the IFQ fisheries and maintain 
diversity in the longline fleet.
    Response: Under the Modified Block Proposal, all initially issued 
QS that would result in less than 20,000 lb (9 mt) of IFQ using the 
1994 total allowable catch (TAC) would be blocked. This means that a 
variety of block sizes will be created, and will be available for 
transfer. Persons who would like to enter the fishery would be able to 
secure a smaller block, and then subsequently transfer the smaller 
block for a larger block as the fishing operation grows and the 
experience of the person increases. This ``step'' approach, made 
possible by the Modified Block Proposal, assists in the growth of each 
operation to efficient economies of scale.
    Also, the size and amount of QS blocks will remain constant, except 
for consolidation of the smallest blocks under the ``sweep-up'' 
provision. This means that at least the minimum number of QS block 
holders will hold blocks of various sizes, providing diversity in the 
longline fleet.
    Comment 11: The Modified Block Proposal will benefit coastal 
communities dependent on the IFQ fisheries by reducing the amount of QS 
that can be consolidated into larger operations, ensuring a more 
uniform landing pattern of fishery product, and providing higher levels 
of harvesting employment.
    Response: NMFS concurs with this comment. Along with reducing 
excessive consolidation, the Modified Block Proposal was designed to 
benefit local coastal communities traditionally dependent on the 
Pacific halibut and sablefish fixed-gear fisheries. As explained 
earlier, QS blocks will maintain diversity in the longline fleet by 
reducing the amount of QS available for consolidation by larger 
operations. Also, smaller, locally owned and operated vessels are more 
likely to deliver to local communities than larger vessels. This is 
because large vessels typically have the capacity to store large 
quantities of fishery product for extended periods of time, thus 
enabling these vessels to deliver to ports other than those located in 
local coastal communities.
    By increasing the potential minimum number of QS holders, the 
Modified Block Proposal will provide more employment for fishermen and 
crew members. By increasing the potential for delivery of fishery 
product in coastal communities, the Modified Block Proposal will 
provide more employment in the fishery processing sector for those 
communities.
    Comment 12: The Modified Block Proposal can be repealed or modified 
at a later date if it turns out to be overly restrictive.
    Response: NMFS concurs with this comment. On the other hand, if the 
Modified Block Proposal is not adopted at this time, adoption at a 
later time will not accomplish the same goals. Transfers and 
consolidation of QS that could occur if the Modified Block Proposal is 
not in place when the IFQ program is implemented might cause 
irrevocable damage to coastal communities and the small vessel fleet.

Classification

    The Council prepared a final regulatory flexibility analysis (FRFA) 
that indicates the action will have a significant economic impact on a 
substantial number of small entities. By reducing consolidation, the 
Modified Block Proposal may increase the total cost of harvesting the 
resource, thereby decreasing the net economic benefits of the IFQ 
Program and increasing harvesting costs to small entities. The analysis 
in the FRFA also indicates that by reducing consolidation, the Modified 
Block Proposal may result in higher levels of harvesting employment. 
Higher levels of harvesting employment and maintenance of diversity in 
fishing operations participating in the IFQ Program are the main goals 
of the Modified Block Proposal. A copy of the FRFA is available from 
the Council (see ADDRESSES).
    This final rule has been determined to be not significant for 
purposes of E.O. 12866.

List of Subjects in 50 CFR Part 676

    Fisheries, Reporting and recordkeeping requirements.

    Dated: October 3, 1994.
Gary Matlock,
Program Management Officer, National Marine Fisheries Service.

    For the reasons set out in the preamble, 50 CFR part 676 is amended 
as follows:

PART 676--LIMITED ACCESS MANAGEMENT OF FEDERAL FISHERIES IN AND OFF 
OF ALASKA

    1. The authority citation for 50 CFR part 676 continues to read as 
follows:

    Authority: 16 U.S.C. 773 et seq. and 1801 et seq.


Sec. 676.16  [Amended]

    2. Section 676.16 is amended by removing and reserving paragraphs 
(i) and (n).
    3. Section 676.20 is amended by revising paragraph (a) and the 
first sentence of the introductory text of paragraph (f) to read as 
follows:


Sec. 676.20  Individual allocations.

* * * * *
    (a) Initial allocation of quota share. The Regional Director shall 
initially assign to qualified persons, on or after October 18, 1994, 
halibut and sablefish fixed gear fishery QS that are specific to IFQ 
regulatory areas and vessel categories. QS will be assigned as a block 
in the appropriate IFQ regulatory area and vessel category if that QS 
would have resulted in an allocation of less than 20,000 lb (9 mt) of 
IFQ for halibut or sablefish based on the 1994 TAC for fixed gear in 
those fisheries for specific IFQ regulatory areas and the QS pools of 
those fisheries for specific IFQ regulatory areas as of October 17, 
1994.
* * * * *
    (f) * * * The Regional Director shall assign halibut or sablefish 
IFQs to each person holding unrestricted QS for halibut or sablefish, 
respectively, up to the limits prescribed at Sec. 676.22 (e) and (f). * 
* *
* * * * *
    4. Section 676.21 is revised to read as follows:


Sec. 676.21  Transfer of QS and IFQ.

    Transfer of QS or IFQ means any transaction requiring QS, or the 
use thereof in the form of IFQ, to pass from one person to another, 
permanently or for a fixed period of time, except that transactions 
requiring IFQ cards to be issued in the name of a vessel master 
employed by an individual or a corporation are not transfers of QS or 
IFQ.
    (a) Transfer procedure. A person who receives QS by transfer may 
not use IFQ resulting from that QS for harvesting halibut or sablefish 
with fixed gear until an Application for Transfer of QS/IFQ 
(Application for Transfer) is approved by the Regional Director. The 
Regional Director shall provide an Application for Transfer form to any 
person on request. Persons who submit an Application for Transfer to 
the Regional Director for approval will receive notification of the 
Regional Director's decision to approve or disapprove the Application 
for Transfer, and, if applicable, the reason(s) for disapproval, by 
mail posted on the date of that decision, unless another communication 
mode is requested on the Application for Transfer. QS or IFQ accounts 
affected by an Application for Transfer approved by the Regional 
Director will change on the date of approval. Any necessary IFQ permits 
will be sent with the notice of the Regional Director's decision.
    (b) Application for Transfer approval criteria. Except as provided 
in paragraph (e) of this section, an Application for Transfer will not 
be approved until the Regional Director has determined that:
    (1) The person applying for transfer received the QS or IFQ to be 
transferred:
    (i) By initial assignment by the Regional Director as provided in 
Sec. 676.20(a); or
    (ii) By approved transfer;
    (2) The person applying to receive the QS or IFQ meets the 
requirements of eligibility in paragraph (c) of this section;
    (3) The person applying for transfer and the person applying to 
receive the QS or IFQ have their notarized signatures on the 
Application for Transfer;
    (4) There are no fines, civil penalties, or other payments due and 
owing, or outstanding permit sanctions, resulting from Federal fishery 
violations involving either person;
    (5) The person applying to receive the QS or IFQ currently exists;
    (6) The transfer would not cause the person applying to receive the 
QS or IFQ to exceed the use limits in Sec. 676.22 (e) or (f);
    (7) The transfer would not violate the provisions of paragraph (f) 
of this section; and
    (8) Other pertinent information requested on the Application for 
Transfer has been supplied to the satisfaction of the Regional 
Director.
    (c) Eligibility to receive QS or IFQ by transfer. All persons 
applying to receive QS or IFQ must submit an Application for 
Eligibility to Receive QS/IFQ (Application for Eligibility), containing 
accurate information, to the Regional Director. The Regional Director 
will not approve a transfer of IFQ or QS to a person until the 
Application for Eligibility for that person is approved by the Regional 
Director. The Regional Director shall provide an Application for 
Eligibility form to any person on request.
    (1) A person must indicate on the Application for Eligibility 
whether the eligibility sought is as:
    (i) An individual; or
    (ii) A corporation, partnership, or other entity.
    (2) A person may submit the Application for Eligibility with the 
Application for Transfer or file the Application for Eligibility prior 
to submitting the Application for Transfer. If a person, as described 
in paragraph (c)(1)(ii) of this section, files the Application for 
Eligibility prior to submitting the Application for Transfer, and that 
person's status subsequently changes, as described in Sec. 676.22(j), 
that person must resubmit an Application for Eligibility before 
submitting, or with, the Application for Transfer.
    (3) The Regional Director's approval of an Application for 
Eligibility will be mailed to the person by certified mail.
    (4) The Regional Director will notify the applicant if an 
Application for Eligibility is disapproved. This notification of 
disapproval will include:
    (i) The disapproved Application for Eligibility; and
    (ii) An explanation why the Application for Eligibility was not 
approved.
    (5) Reasons for disapproval of an Application for Eligibility may 
include, but are not limited to:
    (i) Fewer than 150 days of experience working as an IFQ crew 
member;
    (ii) Lack of compliance with the U.S. citizenship or corporate 
ownership requirements specified by the definition of ``person'' at 
Sec. 676.11;
    (iii) An incomplete Application for Eligibility; or
    (iv) Fines, civil penalties, or other payments due and owing, or 
outstanding permit sanctions, resulting from Federal fishery 
violations.
    (d) Transfers of QS blocks. (1) A QS block must be transferred as 
an undivided whole, unless the size of the QS block exceeds the use 
limits specified at Sec. 676.22. If the QS block to be transferred 
exceeds the use limits specified at Sec. 676.22, the Regional Director 
will divide the block into two blocks, one block containing the maximum 
amount of QS allowable under the QS use limits and the other block 
containing the residual QS.
    (2) QS blocks representing less than 1,000 lb (0.5 mt) of IFQ for 
halibut or less than 3,000 lb (1.9 mt) for sablefish, based on the 
factors listed in Sec. 676.20(a), for the same IFQ regulatory area and 
vessel category, may be consolidated into larger QS blocks, provided 
that the consolidated QS blocks do not represent greater than 1,000 lb 
(0.5 mt) of IFQ for halibut or greater than 3,000 lb (1.4 mt) of IFQ 
for sablefish based on the factors listed in Sec. 676.20(a). A 
consolidated QS block cannot be divided and is considered a single 
block for purposes of use and transferability.
    (e) Transfer of QS or IFQ with restrictions. If QS or IFQ must be 
transferred as a result of a court order, operation of law, or as part 
of a security agreement, but the person receiving the QS or IFQ by 
transfer does not meet all of the eligibility requirements of this 
section, the Regional Director will approve the Application for 
Transfer with restrictions. The Regional Director will not assign IFQ 
resulting from the restricted QS to any person. IFQ with restrictions 
may not be used for harvesting halibut or sablefish with fixed gear. 
The QS or IFQ will remain restricted until:
    (1) The person who received the QS or IFQ with restrictions meets 
the eligibility requirements of this section and the Regional Director 
approves an Application for Eligibility for that person; or
    (2) The Regional Director approves the Application for Transfer 
from the person who received the QS or IFQ with restrictions to a 
person who meets the requirements of this section.
    (f) Transfer restrictions. (1) Except as provided in paragraph (e) 
or paragraph (f)(2) of this section, only persons who are IFQ crew 
members, or that were initially assigned catcher vessel QS, and meet 
the other requirements in this section may receive catcher vessel QS.
    (2) Except as provided in paragraph (f)(3) of this section, only 
persons who are IFQ crew members may receive catcher vessel QS in IFQ 
regulatory area 2C for halibut or in the IFQ regulatory area east of 
140 deg. W. long. for sablefish.
    (3) Catcher vessel QS initially assigned to an individual may be 
transferred to a corporation that is solely owned by the same 
individual. Such transfers of catcher vessel QS in IFQ regulatory area 
2C for halibut or in the IFQ regulatory area east of 140 deg. W. long. 
for sablefish will be governed by the use provisions of Sec. 676.22(i); 
the use provisions pertaining to corporations at Sec. 676.22(j) shall 
not apply.
    (4) The Regional Director will not approve an Application for 
Transfer of catcher vessel QS subject to a lease or any other condition 
of repossession or resale by the person transferring QS, except as 
provided in paragraph (g) of this section, or by court order, operation 
of law, or as part of a security agreement. The Regional Director may 
request a copy of the sales contract or other terms and conditions of 
transfer between two persons as supplementary information to the 
transfer application.
    (g) Leasing QS (applicable until January 2, 1998). A person may not 
use IFQ resulting from a QS lease for harvesting halibut or sablefish 
until an Application for Transfer complying with the requirements of 
paragraph (b) of this section and the lease agreement are approved by 
the Regional Director. A person may lease no more than 10 percent of 
that person's total catcher vessel QS for any IFQ species in any IFQ 
regulatory area to one or more persons for any fishing year. After 
approving the Application for Transfer, the Regional Director shall 
change any IFQ accounts affected by an approved QS lease and issue all 
necessary IFQ permits. QS leases must comply with all transfer 
requirements specified in this section. All leases will expire on 
December 31 of the calendar year for which they are approved.
    5. Section 676.22 is amended by revising paragraph (g) to read as 
follows:


Sec. 676.22  Limitations on the use of QS and IFQ.

* * * * *
    (g) Limitations on QS blocks. No person, individually or 
collectively, may hold more than two blocks for each species in any IFQ 
regulatory area, except that if that person, individually or 
collectively, holds unblocked QS for a species in an IFQ regulatory 
area, such person may only hold one QS block for that species in that 
IFQ regulatory area. For purposes of this section, holding, or to hold, 
blocks of QS means being registered by NMFS as the person who received 
QS by initial assignment or approved transfer.
* * * * *
[FR Doc. 94-24933 Filed 10-6-94; 8:45 am]
BILLING CODE 3510-22-P